SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Appeal from a judgment of the Civil Court of the City of New York, Queens County (Cheree A. Buggs, J.), entered May 5, 2011. The judgment, after a nonjury trial, dismissed the complaint.

ORDERED that the judgment is affirmed, with $25 costs.

Plaintiff commenced this action to recover assigned first-party no-fault benefits for medical services rendered. At a nonjury trial, plaintiff called no witnesses and offered no claim forms into evidence. Instead, plaintiff argued that a 2005 order of the Civil Court, which had granted summary judgment in another action to plaintiff on claims that are not part of the present action, warranted judgment upon the claims at issue because the order further provided that plaintiff was entitled to recover upon a specified claim number if that claim had not been paid. At plaintiff’s request, the Civil Court admitted into evidence deposition testimony given in 2007 by defendant’s employee, who stated that three claims on behalf of assignor John Tran had been denied based on a peer review report, but she was not asked about the claim numbers for these bills. Defendant’s employee did not testify at the present trial. Plaintiff maintained that the [*2]deposition testimony was sufficient to make a connection between the 2005 order of the Civil Court and the present claims, and to prove that the present claims were unpaid. After the trial, judgment was entered in favor of defendant dismissing the complaint.

Plaintiff’s contention that, by virtue of the 2005 Civil Court order, it was entitled to judgment in the instant action lacks merit (see Buechel v Bain, 97 NY2d 295, 303-304 [2001]; Parker v Blauvelt Volunteer Fire Co., 93 NY2d 343, 349 [1999]; Comprehensive Med. Care of NY, P.C. v Hausknecht, 55 AD3d 777 [2008]). At trial, plaintiff failed to proffer any evidence to identify the claim forms upon which plaintiff seeks to recover, let alone establish that such claim forms bore the claim number which was set forth in the 2005 Civil Court order upon which plaintiff relied. In any event, plaintiff failed to establish that the claim forms being sued upon in the instant case remained unpaid. As a result, plaintiff failed to make out a prima facie case demonstrating its entitlement to recover (see Insurance Law § 5106 [a]; Davydov v Progressive Ins. Co., 25 Misc 3d 19 [App Term, 2d, 11th & 13th Jud Dists 2009]; see also Bajaj v General Assur., 18 Misc 3d 25 [App Term, 2d & 11th Jud Dists 2007]).
Accordingly, the judgment is affirmed.

Pesce, P.J., Aliotta and Solomon, JJ., concur.
Decision Date: June 06, 2013

District Court of Nassau County, First District

CV-038267-12

REPRESENTATION:

Friedman, Harfenist, Kraut & Perlstein, LLP, Attorneys for Plaintiff, 3000 Marcus Avenue, Suite 2E1, Lake Success, New York 11042, 516-355-9600; Law Offices of Robert Macchia, Attorney for Defendant, 98 Front Street, Mineola, New York 11501, 516-873-6200.

Michael A. Ciaffa, J.

The following papers have been considered by the Court

on this motion: submitted April 29, 2013

_________________________________________________________ _______________

Papers Numbered

_____________________________________________________________ ___________

Order to Show Cause, Affirmation & Exhibits Annexed………………..1 – 2

Affirmation in Opposition…………………………………………………………..3

Reply Affirmation…………………………………………………………………….. 4

In State Farm Mut. Auto Ins. Co. v Mallela, 4 NY3d 313 (2005), the Court of Appeals held that a “fraudulently incorporated” medical provider is not entitled to reimbursement under no-fault law for services rendered to no-fault claimants, and this holds true even when the services were properly rendered by a licenced medical practitioner. The Mallela decision has spawned a wide range of knotty problems for District Court and Civil Court Judges, often prolonging the resolution of routine claims for no-fault benefits and adding to court congestion. Such delays and court calendar congestion effectively undermine the legislature’s basic intent in enacting the no-fault law. See generally Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 317 (2007), quoting Matter of Medical Society v Serio, 100 NY2d 854, 860 (2003) (“New York’s no-fault automobile insurance system is designed to ensure prompt compensation for losses incurred by accident victims without regard to fault or negligence, to reduce the burden on the courts and to provide substantial premium savings to New York motorists'”).

On the other hand, as recognized in Nyack Hospital v GMAC, 8 NY3d 294, 300 (2007), our state’s no-fault scheme is “designed to promote prompt payment of legitimate claims” (emphasis added) while “reducing rampant abuse.” When an insurer seeks to attack a perceived [*2]“abuse” of the no-fault system by challenging multiple claims in the context of a declaratory judgment action against a given provider, Mallela issues can be best addressed in an economical and comprehensive manner. However, an insurer’s ability to raise Mallela is not limited to such cases. As the instant case illustrates, Mallela defenses are now being raised, frequently, in the defense of otherwise simple and straightforward claims seeking payment for routine medically necessary procedures.

The principal issue presented by this motion for a protective order involves an insurer’s attempt to discover financial documents relevant to its Mallela defense through a subpoena served upon the medical provider’s bank. The subpoena seeks a large number of financial records and documents which the insurer claims are relevant, material, and necessary to its defenses to the claim. While the requested records are “relevant” in a broad sense, the insurer’s subpoena raises policy concerns which require a careful balancing of interests.

Plaintiff, Nexray Medical Imaging, P.C., commenced this no-fault action against defendant, Allstate Insurance Company, in November 2012, after defendant denied a claim seeking payment for a routine MRI that plaintiff performed in February, 2012. Although the amount of plaintiff’s claim is small ($912.00), defendant’s defenses to the claim include wide-ranging allegations that plaintiff “is engaged in the illegal and unlawful corporate practice of medicine,” that plaintiff “materially misrepresented that a licensed physician was the owner of the plaintiff’s practice,” that plaintiff was “controlled, owned, managed and supervised by persons who are not licensed or authorized to own a professional service corporation or authorized to practice medicine,” and that plaintiff “is engaged in the unlawful practice of fee splitting…” (defendant’s answer, nineteenth through twenty-third affirmative defenses).

Defendant’s answer was accompanied by equally far reaching requests for interrogatories and for discovery and inspection of documents. The propriety of those requests is not put in issue by plaintiff on this motion.Rather, plaintiff’s motion raises strenuous objection only to defendant’s attempt to subpoena certain bank records from Citibank, N.A., a non-party. They include a demand for signature cards for the account, together with “[a]ll records indicating withdrawal and deposit activity” and “copies of all checks from which money was drawn from the account, canceled checks, transaction statements, electronic fund transfers, wire transfers, account ledgers, corporate resolutions, power of attorney and all correspondence between Citibank, NA and Nexray Medical Imaging, PC between April 1, 2011 and the present.”

By order to show cause dated March 8, 2013, production of these bank records was stayed pending further Court order. Plaintiff’s motion attacks the subpoena on multiple grounds. At the outset, the Court rejects defendant’s contention that plaintiff lacks standing to contest the subpoena. CPLR 3103(a) not only permits a non-party witness to seek a protective order, “but also permits any party opposing the disclosure to make the motion.” Snedeker v. Schiff Hardin LLP, 2010 NY Slip Op 30151 (Sup Ct Nassau Co., Driscoll, J.); accord, Morano v Slattery Skanska, Inc., 18 Misc 3d 464, 472 (Sup Ct Queens Co 2007); McDaid v Semegran, 2007 NY Slip Op 51227 (Sup Ct Nassau Co); Matter of MacLeman, 2005 NY Slip Op 51675 (Surr Ct Westchester Co). The Court accordingly turns to the merits of plaintiff’s contentions.

To the extent that plaintiff argues that the subpoena is “facially defective,” the Court disagrees. The subpoena, on its face, states that the records and documents at issue “are relevant, material, and necessary to verify the depositor’s entitlement to recover no-fault benefits under [*3]Regulation 68 (11 NYCRR Part 65).” It therefore literally satisfies CPLR 3101(a)(4), by providing “notice stating the circumstances or reasons such disclosure is sought or required.”

Moreover, under current caselaw, a showing of “special circumstances” is no longer needed when discovery is sought from a non-party. See Kooper v Kooper, 74 AD3d 6, 8 (2d Dept 2010). Instead, requests for discovery from a non-party are largely governed by the same general principles that apply to requests directed to a party itself. Subject to a test of “usefulness and reason,” a party is entitled to “full disclosure” of “material and necessary” information bearing upon the controversy at hand. 74 AD3d at 10. Accordingly, the Court rejects plaintiff’s arguments that defendant’s subpoena is “facially defective” or that it is “being impermissibly used” as a pre-trial disclosure device.

These conclusions bring the Court to the most difficult issue. The Court’s rejection of the foregoing arguments does not eliminate the need for careful judicial oversight of the discovery process, in order to protect the plaintiff’s legitimate privacy interests in its bank records and financial affairs, while preserving defendant’s right to reasonable disclosure of material and relevant information and documents. See CPLR 3103, 3104.

In balancing these interests, the Court is guided, in the first instance, by rulings made by other courts. Recent Appellate Term decisions have made plain that Mallela discovery requests must be supported by “case specific allegations.” See Pomona Med. Diagnostic, PC v Adirondack Ins. Co., 2012 NY Slip Op 51165 (App Term 1st Dept); see also Midwood Acupuncture, PC v State Farm Fire & Cas. Co., 2008 NY Slip Op 52468 (App Term 2d Dept) (“the record reveals that the defendant set forth detailed and specific reasons for believing that plaintiff may be ineligible to recover no-fault benefits as a fraudulently incorporated professional service corporation”). Nor may insurers engage in “a fishing expedition” for Mallela evidence “when they cannot set forth a reliable factual basis for what amounts to, at best, mere suspicions.” Pomona Med. Diagnostic, PC v Adirondack Ins. Co., supra; accord, JKM Medical, PC v Progressive Ins. Co., index no. 43109/11, decision dated July 18, 2012 (Dist Ct Nassau Co., Ciaffa, J) (“allowing comprehensive Mallela discovery upon such mere suspicions would be abusive and palpably improper”).

Trial court decisions from Civil Court judges generally follow a similar approach. In a series of well-reasoned opinions, Judge Katherine Levine draws a distinction between cases where the insurer “has articulated a founded belief’ that plaintiff is actually controlled by a non-licenced professional,” and cases where the insurer has submitted nothing more than “unsupported conclusions” and “unsubstantiated hypotheses and suppositions.” Compare Lenox Neuropsychiatry Med., PC v State Farm Ins. Co., 2009 NY Slip Op 50178 (Civ Ct Richmond Co.), with Bay Plaza Chiropractic v State Farm Mut. Auto. Ins. Co., 2008 NY Slip Op 51925 (Civ Ct Richmond Co.).

Moreover, even in cases where some limited Mallela discovery is warranted, trial court judges have emphasized that the scope of discovery into Mallela issues “is not unlimited.” See Cambridge Medical, PC v Nationwide Prop. & Cas. Ins. Co., 2008 NY Slip Op 50629 (Civ Ct Richmond Co., Levine, J), quoting Carothers v Insurance Companies Represented by Bruno, Gerbino & Soriano, LLP, 13 Misc 3d 970, 974 (Civ Ct Richmond Co., Sweeney, J). “Since the amount in dispute in most no-fault matters is small,” a trial court “should not hesitate to exercise its protective powers” under CPLR 3103(a) to curtail “overburdening” requests or “to prevent the [*4]proverbial fishing expedition.” Cambridge Medical, PC v Nationwide Prop. & Cas. Ins. Co., supra; accord, Carothers v Insurance Companies Represented by Bruno, Gerbino & Soriano, LLP, supra (protective orders should “be freely issued to limit discovery in no-fault actions where the amount in dispute is small”).

Finally, in cases, like this one, where Mallela discovery is sought from a non-party, the rules governing non-party discovery provide additional grounds for closely scrutinizing the request. On the latter point, the Second Department’s recent decision in Kooper v Kooper, supra, provides the most appropriate framework for analysis.

As explained in Kooper, discovery requests directed to both parties and non-parties are subject to the same “threshold requirement” — “that the disclosure sought is material and necessary.'” 74 AD3d at 10. The requirement, in general, is easy to satisfy. As construed by the Court of Appeals, see Allen v. Crowell-Collier Publ. Co., 21 NY2d 403, 406 (1968), the phrase “material and necessary” simply “means nothing more or less than relevant.'” Kooper, supra, 74 AD3d at 10, quoting Connors, Practice Commentaries to McKinney’s CPLR, at C3105:5. Applying this threshold test, defendant’s request for plaintiff’s bank records clearly involves information which is “relevant” to defendant’s defenses. See generally Matter of Andrew Carothers, M.D., P.C. v. Insurance Companies Represented by Bruno Gerbino & Soriano, LLP, 26 Misc 3d 448, 452-3 (Civ Ct Richmond Co. 2009) (“That Dr Carothers did not own or control the corporation was further demonstrated by how money flowed into and out of the corporate bank accounts”). Consequently, to the extent plaintiff argues that the subpoena seeks records which are “irrelevant and immaterial” to the instant action, this argument, too, must be rejected.

Nevertheless, disclosure requests directed to non-parties implicate “considerations in addition to those governing discovery from a party.” Kooper, supra, 74 AD3d at 11. These additional considerations go to the heart of plaintiff’s objection to defendant’s subpoena, and put in sharp focus the Court’s statutory authority “to impose, in its discretion, appropriate restrictions on demands which are unduly burdensome’…[or] may cause unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice to any person’…” Kooper, supra, quoting CPLR 3103(a).

As the Court further explained in Kooper, the Appellate Division’s decisions “have consistently adhered to the principle that more than mere relevance and materiality is necessary to warrant disclosure from a nonparty.'” 74 AD3d at 17-18, quoting Diogardi v St. John’s Riverside Hosp., 144 AD2d 333, 334-5 (2d Dept 1988). Moreover, since “a party’s inability to obtain the requested disclosure from his or her adversary or from independent sources [is] a significant factor in determining the propriety of discovery from a nonparty,” a motion to quash may properly be granted “where the party issuing the subpoena has failed to show that the disclosure sought cannot be obtained from sources other than the nonparty.” Kooper, supra, 74 AD3d at 16-17. “Circumstances necessarily vary from case to case. The supervision of discovery, the setting of reasonable terms and conditions for disclosure, and the determination of whether a particular discovery demand is appropriate, are all matters within the sound discretion of the trial court, which must balance competing interests.”74 AD3d at 17.

In the instant case, plaintiff’s moving papers show that plaintiff’s president and record owner, Dr. William Weiner, was questioned under oath in July 2012, with respect to a large number of claims for no-fault benefits claims that plaintiff had filed with the defendant. The [*5]“Schedule of Claimants” annexed to defendant’s EUO request includes the name of plaintiff’s assignor in this action (Steven Olivares). Dr. Weiner was examined at length respecting potential Mallela issues. He answered each question without hesitation and equivocation.

As part of its compliance with defendant’s EUO request, plaintiff produced more than a dozen documents, including the leases for the premises it occupied, its revolving loan and security agreement, its asset purchasing agreements, UCC financing documents, licences for its professional employees, prior leases for the premises, and W-2s/payroll records for other doctors who worked for plaintiff. Notwithstanding the foregoing, defendant followed up with a second request for production of extensive financial documentation and other records, including tax returns. However, no request was made, at that time, for the bank records that defendant now seeks to obtain through its subpoena.

Thereafter, in the context of its previously served demands for discovery from plaintiff in this action, defendant requested production of many of the very same bank records that it presently requests in its subpoena. Plaintiff objected to the request on the ground that it was “vague, overly broad, unduly burdensome and irrelevant.” In the face of this objection, defendant made no effort to seek court intervention to resolve the dispute. Instead, it served a subpoena upon Citibank, requesting the same records, plus others.

This fact, by itself, reinforces the Court’s suspicion that defendant is improperly using the subpoena in order to obtain leverage in its defense of this matter. If defendant truly believes that plaintiff is a “fraudulently incorporated” medical corporation, it can and should commence a declaratory judgment action against the plaintiff. What it cannot do, in this Court’s opinion, is to seek a financial “proctology exam” of plaintiff’s bank account in the defense of a $912.00 claim, based on mere suspicion that it may uncover evidence of a possible Mallela violation. Cf. Revson v Cinque & Cinque, PC, 221 F3d 71 (2d Cir 2000).

In any event, based upon the extensive testimony given by Dr. Weiner at his EUO, and plaintiff’s production of a panoply of documentation respecting the plaintiff’s financial arrangements with its landlord and others, the Court is not inclined to allow defendant to engage in an overbroad and palpably improper “fishing expedition” into plaintiff’s finances.

For these reasons, the Court grants a protective order in plaintiff’s favor, limiting the subpoena to the signature cards for the subject Citibank account. Insofar as Dr. Weiner’s EUO testimony may have raised additional questions respecting his actual control over plaintiff’s financial affairs, the signature cards should show whether other individuals have been allowed to write checks and make withdrawals from the account. Pending production of the signature cards, and subject to further discovery proceedings between the parties, the Court withholds judgment on whether plaintiff’s bank records may be obtained by the defendant in connection with its defenses to this action. In the event that defendant seeks additional discovery respecting the bank records, however, such requests should be directed to plaintiff, itself, and not to Citibank.

So Ordered:

[*6]

District Court Judge

Dated: June 6, 2013

cc:Friedman Harfenist Kraut & Perlstein, LLP

Law Offices of Robert Macchia

Citibank, N.A.

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Nassau County, First District (Andrea Phoenix, J.), dated July 12, 2011. The order granted defendant’s motion to dismiss the complaint.

ORDERED that the appeal is dismissed and the order of the District Court dated July 12, 2011 granting defendant’s motion to dismiss the complaint is vacated.

Plaintiff commenced this action in Supreme Court, Nassau County, pursuant to Insurance Law § 5106 (c), for de novo adjudication of defendant provider’s assigned first-party no-fault benefits claim that had resulted in an arbitration award in favor of the provider. The ground for the de novo adjudication request was that the arbitration award exceeded $5,000. The complaint sought a determination that defendant was not entitled to recover assigned first-party no-fault benefits under plaintiff insurer’s policy. Defendant moved to dismiss the complaint for, among other things, failure to state a cause of action, and plaintiff opposed the motion. While the motion was pending, the Supreme Court transferred the action to the District Court of Nassau County pursuant to CPLR 325 (d). By order dated July 12, 2011, the District Court granted defendant’s motion and dismissed the complaint.

This action seeks, in essence, a declaratory judgment and not monetary damages. While we cannot review the propriety of the order of the Supreme Court transferring this declaratory judgment action to the District Court pursuant to CPLR 325 (d) (see e.g. Priel v Linarello, 7 Misc 3d 64 [App Term, 2d & 11th Jud Dists 2005], affd 44 AD3d 835 [2007]; Green v Lakeside Manor Home for Adults, Inc., 30 Misc 3d 16 [App Term, 2d, 11th & 13th Jud Dists 2010]), it is, nevertheless, not within the subject matter jurisdiction of the District Court to adjudicate this particular type of declaratory judgment action (see CPLR 3001; cf. UDCA 212-a [conferring subject matter jurisdiction on the District Court to render a declaratory judgment with respect to certain actions commenced by a party aggrieved by an arbitration award issued pursuant to the New York State Fee Dispute Resolution Program]). “The act of transferring [the action] from Supreme Court to [District Court] did not automatically confer the former’s subject matter jurisdiction upon the latter” (Priel v Linarello, 7 Misc 3d at 66). Thus, as the District Court [*2]lacked subject matter jurisdiction, its order is a nullity (see Green v Lakeside Manor Home for Adults, Inc., 30 Misc 3d 16; Briscoe v White, 8 Misc 3d 1 [App Term, 9th & 10th Jud Dists 2004]).

Accordingly, the appeal is dismissed and the District Court’s order dated July 12, 2011 is vacated.

LaSalle, J.P., Nicolai and Iannacci, JJ., concur.
Decision Date: May 23, 2013

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Suffolk County, Third District

(C. Stephen Hackeling, J.), dated March 21, 2012. The order, insofar as appealed from, denied defendant’s motion for summary judgment dismissing the complaint.

ORDERED that the order, insofar as appealed from, is modified by providing that the branches of defendant’s motion seeking summary judgment dismissing so much of the complaint as sought to recover upon plaintiff’s claims in the sums of $2,516.58, $967.52 and $832.92, respectively, are granted; as so modified, the order, insofar as appealed from, is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits upon 15 claims, defendant appeals from so much of an order as denied its motion for summary judgment dismissing the complaint.

As to 12 of the 15 claims at issue, defendant established that it had timely denied (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]) those claims on the ground of lack of medical necessity. Defendant also submitted an affirmed report of an independent medical examination (IME) with respect to 11 of the 12 claims, and a peer review report with respect to the 12th, each of which set forth a factual basis and medical rationale for the conclusion that the services in question were not medically necessary.

In opposition to defendant’s motion, plaintiff submitted an affirmed report of an IME, conducted by a different doctor one day after the IME performed by defendant’s doctor. The IME report submitted by plaintiff contradicted the findings of defendant’s IME report and was sufficient to raise a triable issue of fact as to the medical necessity of the 11 claims which had been denied based upon defendant’s IME report (see Park Slope Med. & Surgical Supply, Inc. v New York Cent. Mut. Fire Ins. Co., 22 Misc 3d 141[A], 2009 NY Slip Op 50441[U] [App Term, 2d, 11th & 13th Jud Dists 2009]).

However, plaintiff failed to offer any medical evidence to rebut the conclusions of [*2]defendant’s peer review report, which established a lack of medical necessity for the
12th claim. Accordingly, the branch of defendant’s motion seeking summary judgment dismissing so much of the complaint as sought to recover upon plaintiff’s claim for $2,516.58, which was denied based upon the peer review, should have been granted (see Delta Diagnostic Radiology, P.C. v Integon Natl. Ins. Co., 24 Misc 3d 136[A], 2009 NY Slip Op 51502[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; Delta Diagnostic Radiology, P.C. v American Tr. Ins. Co., 18 Misc 3d 128[A], 2007 NY Slip Op 52455[U] [App Term, 2d & 11th Jud Dists 2007]; A. Khodadadi Radiology, P.C. v NY Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d & 11th Jud Dists 2007]).

With regard to two of the three remaining claims, for $967.52 and $832.92, respectively, defendant established that it had timely mailed (see St. Vincent’s Hosp. of Richmond, 50 AD3d 1123; Residential Holding Corp., 286 AD2d 679) initial and follow-up requests for verification to plaintiff (see Insurance Department Regulations [11 NYCRR] §§ 65-3.5 [b]; 65-3.6 [b]). Defendant also established that it had never received responses to these requests. Thus, the branches of defendant’s motion seeking summary judgment dismissing so much of the complaint as sought to recover upon those two claims should have been granted, as defendant’s time to pay or deny those claims had not begun to run (see Insurance Department Regulations [11 NYCRR] § 65-3.8 [a]; Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d 903 [2007]; Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492 [2005]; Hospital for Joint Diseases v State Farm Mut. Auto. Ins. Co., 8 AD3d 533 [2004]).

Finally, as to the 15th claim, defendant failed to establish as a matter of law that the fee charged exceeded the amount set forth in the workers’ compensation fee schedule (see Rogy Med., P.C. v Mercury Cas. Co., 23 Misc 3d 132[A], 2009 NY Slip Op 50732[U] [App Term, 2d, 11th & 13th Jud Dists 2009]), and therefore it was not entitled to summary judgment on this claim.

Accordingly, the order, insofar as appealed from, is modified by providing that the branches of defendant’s motion seeking summary judgment dismissing so much of the complaint as sought to recover upon plaintiff’s claims for $2,516.58, $967.52 and $832.92, respectively, are granted.

LaSalle, J.P., Nicolai and Iannacci, JJ., concur.
Decision Date: May 22, 2013

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Carolyn E. Wade, J.), dated February 15, 2011. The order, insofar as appealed from, denied defendant’s cross motion for summary judgment dismissing the complaint.

ORDERED that the order, insofar as appealed from, is reversed, with $30 costs, and defendant’s cross motion for summary judgment dismissing the complaint is granted.

In this action by a provider to recover assigned first-party no-fault benefits, defendant appeals from so much an order of the Civil Court as denied defendant’s cross motion for summary judgment dismissing the complaint.

Defendant’s cross motion papers established that defendant had timely denied the claims at issue (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]) based on a lack of medical necessity. In addition, defendant submitted two affirmed peer review reports, each of which set forth a factual basis and a medical rationale for the determination that there was no medical necessity for the services at issue. As defendant’s showing that the services were not medically necessary was not rebutted by plaintiff, defendant’s cross motion should have been granted (see Delta Diagnostic Radiology, P.C. v Integon Natl. Ins. Co., 24 Misc 3d 136[A], 2009 NY Slip Op 51502[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; Delta Diagnostic Radiology, P.C. v American Tr. Ins. Co., 18 Misc 3d 128[A], 2007 NY Slip Op 52455[U] [App Term, 2d & 11th Jud Dists 2007]; A. Khodadadi Radiology, P.C. v NY Cent. Mut. Fire Ins. Co., 16 Misc 3d 131[A], 2007 NY Slip Op 51342[U] [App Term, 2d & 11th Jud Dists 2007]). Plaintiff’s remaining contentions on appeal lack merit (see Quality Health Prods. v GEICO Gen. Ins. Co., 34 Misc 3d 129[A], 2011 NY Slip Op 52299[U] [App Term, 2d, 11th & 13th Jud Dists 2011]; Queens Med. Supply, Inc. v GEICO Gen. Ins. Co., 34 Misc 3d 127[A], 2011 NY Slip Op 52284[U] [App Term, 2d, 11th & 13th Jud Dists 2011]; see also Urban Radiology, P.C. v Tri-State Consumer Ins. Co., 27 Misc 3d 140[A], 2010 NY Slip Op 50987[U] [App Term, 2d, 11th & 13th Jud Dists 2010]). [*2]

Accordingly, the order, insofar as appealed from, is reversed, and defendant’s cross motion for summary judgment dismissing the complaint is granted.

Pesce, P.J., Rios and Solomon, JJ., concur.
Decision Date: May 22, 2013

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Richmond County (Philip S. Straniere, J.), entered February 17, 2011. The order granted defendant’s motion to dismiss the complaint on the ground that the action is barred by the statute of limitations.

ORDERED that the order is reversed, without costs, and defendant’s motion to dismiss the complaint on the ground that the action is barred by the statute of limitations is denied.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff appeals from an order which granted defendant’s motion to dismiss the complaint pursuant to CPLR 3211 (a) (5) on the ground that the action is barred by the statute of limitations.

A defendant moving for dismissal on statute of limitations grounds bears the initial burden of establishing, prima facie, that the time in which to sue has expired (see 6D Farm Corp. v Carr, 63 AD3d 903 [2009]; Island ADC, Inc. v Baldassano Architectural Group, P.C., 49 AD3d 815 [2008]). “In an action which is commenced by service, a claim asserted in the complaint is interposed against the defendant . . . when the summons is served upon the defendant” (CPLR 203 [b] [1]). The present action was commenced in the Civil Court in 2003 by service of the summons, pursuant to CPLR 312-a (see CCA former 403), before the filing system for commencing actions in the Civil Court took effect. Here, dismissal of the action due to a violation of former section 409 of the New York City Civil Court Act, which required that a copy of the summons with proof of service ^[FN1] be filed with the clerk of the court within 14 days after service of the summons, is not warranted, since, by order entered October 16, 2009, the Civil Court (Katherine A. Levine, J.) conditionally permitted the filing thereof nunc pro tunc ^[FN2] [*2]
(see CCA former section 411; J.R. Dugo, D.C., P.C. v New York Cent. Mut. Ins. Co., 24 Misc 3d 68 [App Term, 2d, 11th & 13th Jud Dists 2009]). It is undisputed that plaintiff filed the summons with proof of service in accordance with Judge Levine’s order and, thus, the filing was given nunc pro tunc effect (see CCA former section 411). Consequently, since the cause of action accrued in 2002, defendant failed to make a prima facie showing that the six-year statute of limitations (see CPLR 213 [2]; see Mandarino v Travelers Prop. Cas. Ins. Co., 37 AD3d 775 [2007]) had expired prior to the April 2003 commencement of the action.

Accordingly, the order is reversed and defendant’s motion to dismiss the complaint on the ground that the action is barred by the statute of limitations is denied.

Weston, J.P., Pesce and Rios, JJ., concur.
Decision Date: May 22, 2013

Footnotes

Footnote 1: In the instant case, proof of service was defendant’s signed acknowledgment of receipt of the mailed service of the summons (see CPLR 312-a [b]).

Footnote 2: The issue of whether the Civil Court providently exercised its discretion in permitting the nunc pro tunc filing after more than five years is not subject to review on this appeal.

SUPREME COURT, APPELLATE TERM, FIRST DEPARTMENT

Defendant appeals from an order of the Civil Court of the City of New York, Bronx County (Ruben Franco, J.), entered July 31, 2012, which denied its motion for summary judgment dismissing the complaint.

Per Curiam.

Order (Ruben Franco, J.), entered July 31, 2012, affirmed, with $10 costs.

The action, seeking recovery of first-party no-fault benefits, is not ripe for summary disposition. The defendant insurer failed to establish, prima facie, that its requests for verification in the form of an examination under oath (EUO) were effective to toll its time to pay or deny the claims at issue. Defendant’s EUO letters of July 18, 2006 and August 2, 2006 preceded its receipt of plaintiff’s August 10, 2006 claim, and thus did not trigger the tolling of the 30-day period (see Sound Shore Med. Ctr. v. New York Cent. Mut. Fire Ins. Co., _ AD3d _, 2013 NY Slip Op 02390 [2nd Dept 2013]). Moreover, triable issues are raised as to whether, assuming defendant properly mailed its August 26, 2006 EUO request, it made the required follow-up request for verification (see 11 NYCRR 65-3.6[b]).

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
Decision Date: May 21, 2013

—[*1] The Zuppa Firm PLLC, Garden City, N.Y. (Raymond J. Zuppa of counsel), for appellant.

Rivkin Radler LLP, Uniondale, N.Y. (Evan H. Krinick, Cheryl F. Korman, Michael P. Versichelli, and Stuart M. Bodoff of counsel), for respondent State Farm Mutual Automobile Insurance Company.

Schenk, Price, Smith & King, LLP, New York, N.Y. (John P. Campbell of counsel), for respondents 684 Associates, Ltd., doing business as D&D Associates, Hooper Evaluations, Inc., Hooper Holmes, Inc., DDA Management Services, LLC, Brian Darmody, Anthony Minichini, and George Vadyak.

Lewis Johs Avallone Aviles, LLP, Islandia, N.Y. (Ann K. Kandel of counsel), and Leonard J. Tartamella, Hauppauge, N.Y., for respondents Medical Management Group of New York, Inc., and William Polikoff (one brief filed).

Aaronson Rappaport Feinstein & Deutsch, LLP, New York, N.Y. (Elliott J. Zucker of counsel), for respondent Marlon Seliger.

In an action, inter alia, to recover damages for breach of contract, the plaintiff appeals, as limited by his brief, from so much of an order of the Supreme Court, Suffolk County (Cohalan, J.), dated August 31, 2011, as granted the separate motions of the defendant State Farm Mutual Automobile Insurance Company, the defendants Hooper Evaluations, Inc., Hooper Holmes, Inc., 684 Associates, Ltd., doing business as D&D Associates, DDA Management Services, LLC, Brian Darmody, Anthony Minichini, and George Vadyak, the defendant Stephan Schector, the defendants Medical Management Group of New York, Inc., and William Polikoff, and the defendant Marlon Seliger to dismiss the complaint insofar as asserted against each of them pursuant to CPLR 3211 (a) (7).

Ordered that the order is modified, on the law, by deleting the provision thereof granting that branch of the motion of the defendant State Farm Mutual Automobile Insurance Company which was pursuant to CPLR 3211 (a) (7) to dismiss the first cause of action, which alleged breach of contract, and substituting therefor a provision denying that branch of the motion; as so [*2]modified, the order is affirmed insofar as appealed from, with one bill of costs payable by the plaintiff to the defendants Hooper Evaluations, Inc., Hooper Holmes, Inc., 684 Associates, Ltd., doing business as D&D Associates, DDA Management Services, LLC, Brian Darmody, Anthony Minichini, and George Vadyak, the defendants Medical Management Group of New York, Inc., and William Polikoff, and the defendant Marlon Seliger, appearing separately and filing separate briefs.

A cause of action premised upon fraud cannot lie where it is based on the same allegations as a cause of action alleging breach of contract (see Yenrab, Inc. v 794 Linden Realty, LLC, 68 AD3d 755 [2009]; Heffez v L & G Gen. Constr., Inc., 56 AD3d 526 [2008]). Where “a claim to recover damages for fraud is premised upon an alleged breach of contractual duties and the supporting allegations do not concern representations which are collateral or extraneous to the terms of the parties’ agreement, a cause of action sounding in fraud does not lie” (Yenrab, Inc. v 794 Linden Realty, LLC, 68 AD3d at 757 [internal quotation marks omitted]; see McKernin v Fanny Farmer Candy Shops, 176 AD2d 233, 234 [1991]). Here, the fraud cause of action against the defendant State Farm Mutual Automobile Insurance Company (hereinafter State Farm) is based on the same allegations as the breach of contract cause of action. Accordingly, the Supreme Court properly granted that branch of State Farm’s motion which was pursuant to CPLR 3211 (a) (7) to dismiss the third cause of action, sounding in fraud, insofar as asserted against it.

Further, the Supreme Court properly granted those branches of the separate motions of the remaining defendants which sought to dismiss the fraud cause of action insofar as asserted against each of them. A cause of action to recover damages for fraud requires allegations of (1) a false representation of fact, (2) knowledge of the falsity, (3) intent to induce reliance, (4) justifiable reliance, and (5) damages (see Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 559 [2009]; Pace v Raisman & Assoc., Esqs., LLP, 95 AD3d 1185 [2012]). Moreover, CPLR 3016 (b) requires that the circumstances underlying a cause of action based on fraud be stated “in detail” (see Scott v Fields, 92 AD3d 666, 668 [2012]). Here, the allegations of fraud against the remaining defendants either were bare and conclusory or do not rise to the level of fraud. Consequently, the Supreme Court properly granted those branches of the separate motions of the remaining defendants which were pursuant to CPLR 3211 (a) (7) to dismiss the third cause of action insofar as asserted against each of them.

However, the Supreme Court erred in granting that branch of State Farm’s motion which was to dismiss the first cause of action, which alleged breach of contract. The first cause of action contained sufficient factual allegations to state a cause of action to recover damages for breach of contract against State Farm. The complaint alleged, among other things, that the plaintiff entered into an insurance contract for State Farm to provide the plaintiff with no-fault insurance benefits if he was involved in a car accident, and that State Farm breached the contract by denying coverage for medical services. Since the allegations in the complaint were sufficient to state a breach of contract cause of action, the Supreme Court should have denied that branch of State Farm’s motion which was pursuant to CPLR 3211 (a) (7) to dismiss the first cause of action.

The Supreme Court properly granted that branch of State Farm’s motion which was pursuant to CPLR 3211 (a) (7) to dismiss the second cause of action, which sought consequential damages for breach of the no-fault insurance benefits policy. The plaintiff’s prolix allegations, when “[s]tripped of their verbiage” (United States Fid. & Guar. Co. v Pressler, 77 NY2d 921, 923 [1991]), do not adequately plead facts that would support a finding that his damages for pain and suffering arose out of State Farm’s alleged breach of its obligations under its no-fault insurance contract with him (see id. at 923).

The plaintiff’s remaining contention is without merit. Balkin, J.P., Chambers, Roman and Hinds-Radix, JJ., concur.

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (Dawn Jimenez Salta, J.), entered August 4, 2011, deemed from a judgment of the same court entered September 6, 2011 (see CPLR 5501 [c]). The judgment, entered pursuant to the August 4, 2011 order granting plaintiff’s motion for summary judgment and denying defendant’s cross motion for summary judgment dismissing the complaint, awarded plaintiff the principal sum of $1,564.50.

ORDERED that the judgment is reversed, with $30 costs, the order entered August 4, 2011 is vacated, plaintiff’s motion for summary judgment is denied and defendant’s cross motion for summary judgment dismissing the complaint is granted.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment, and defendant cross-moved for summary judgment dismissing the complaint on the ground that the action was premature since plaintiff had failed to provide all of the requested verification. Defendant appeals from an order of the Civil Court entered August 4, 2011 which granted plaintiff’s motion for summary judgment and denied defendant’s cross [*2]motion for summary judgment dismissing the complaint. A judgment was subsequently entered in favor of plaintiff, from which the appeal is deemed to have been taken (see CPLR 5501 [c]).

In support of its cross motion for summary judgment, defendant submitted an affidavit by its claims examiner which established that defendant had timely mailed (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]) its request and follow-up request for verification, which sought, among other things, prescribed NF-3 claim forms. With respect to the prescribed claim forms, the Insurance Department Regulations provide that “[a]n insurer must accept proof of claim submitted on a form other than a prescribed form if it contains substantially the same information as the prescribed form” (see Insurance Department Regulations [11 NYCRR] § 65-3.5 [f]). The regulation further permits an insurer to require submission of the prescribed form (id.). Contrary to the determination of the Civil Court, the information contained in the claim forms which plaintiff submitted to defendant was not “substantially the same information” (Insurance Department Regulations [11 NYCRR] § 65-3.5 [f]) as required to be set forth on a prescribed NF-3 form (Sound Shore Med. Ctr. v New York Cent. Mut. Fire Ins. Co., ___ AD3d___, 2013 NY Slip Op 02390 [2d Dept 2013]).

Since plaintiff did not demonstrate that it had provided defendant with all of the requested verification prior to the commencement of this action, the 30-day period within which defendant was required to pay or deny the claims did not begin to run (see Insurance Department Regulations [11 NYCRR] § 65-3.8 [a]; Central Suffolk Hosp. v New York Cent. Mut. Fire Ins. Co., 24 AD3d 492 [2005]).

Accordingly, the judgment is reversed, the order entered August 4, 2011 is vacated, plaintiff’s motion for summary judgment is denied and defendant’s cross motion for summary judgment dismissing the complaint is granted. In light of our determination, we do not reach defendant’s remaining contentions.

Weston, J.P., Pesce and Rios, JJ., concur.
Decision Date: May 14, 2013

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Appeal from a judgment of the Civil Court of the City of New York, Kings County (Helen C. Sturm, J.H.O.), entered July 26, 2011. The judgment, after a nonjury trial, dismissed the complaint.

ORDERED that the judgment is affirmed, with $25 costs.

In this action by a provider to recover assigned first-party no-fault benefits, a nonjury trial was held, limited to defendant’s defense of lack of medical necessity. Following the trial, the Civil Court found that defendant’s doctor’s testimony had demonstrated that the supplies in question were not medically necessary. Consequently, a judgment was entered in favor of defendant dismissing the complaint.

On appeal, plaintiff does not challenge the substance of defendant’s expert witness’s testimony. Instead, plaintiff objects to the admission into evidence of a peer review report and the underlying medical records. At a trial on the issue of medical necessity, a peer review report is not admissible to prove the lack of medical necessity. Rather, that issue is to be resolved based upon the testimony given by the medical experts (see A-Quality Med. Supply v GEICO Gen. Ins. Co., ____ Misc 3d ____, 2013 NY Slip Op 23088 [App Term, 2d, 11th & 13th Jud Dists 2013]). In this case, defendant properly established the lack of medical necessity at trial through the testimony of its expert witness. Thus, plaintiff’s contention that reversal is warranted because the court admitted the peer review report into evidence lacks merit. [*2]

The remainder of plaintiff’s objections similarly lack merit (see Park Slope Med. & Surg. Supply, Inc. v Travelers, 37 Misc 3d 19, 22-23 [App Term, 2d, 11th & 13th Jud Dists 2012]; Alrof, Inc. v Progressive Ins. Co., 34 Misc 3d 29 [App Term, 2d, 11th & 13th Jud Dists 2011]; Urban Radiology, P.C. v Tri-State Consumer Ins. Co., 27 Misc 3d 140[A], 2010 NY Slip Op 50987[U] [App Term, 2d, 11th & 13th Jud Dists 2010]).

Accordingly, the judgment is affirmed.

Weston, J.P., Pesce and Rios, JJ., concur.
Decision Date: May 14, 2013